International Expansion: Croatia PESTEL Analysis Report

This report presents a PESTEL analysis of Croatia, examining the political, economic, social, technological, legal, and environmental factors influencing international business expansion. The analysis focuses on the potential market entry of Barker and Stonehouse, a British furniture retailer. The report delves into Croatia's political stability, economic indicators like GDP and unemployment, social aspects including lifestyle and disposable income, technological advancements, legal regulations, and environmental concerns. It assesses the implications of these factors, providing insights into market opportunities and challenges. Furthermore, the report outlines a marketing strategy for Barker and Stonehouse, including mission, vision, objectives, marketing mix (product, price, place, promotion, people, process, and physical evidence), and a SWOT analysis. Segmentation, targeting, and positioning (STP) strategies are also discussed to guide market entry and growth. The report concludes with recommendations for Barker and Stonehouse's international expansion into Croatia, based on the PESTEL and strategic analyses.

CROATIA PESTEL
ANALYSIS

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
PESTEL analysis.........................................................................................................................3
Marketing strategy......................................................................................................................5
Recommendations.......................................................................................................................9
CONCLUSIONS............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
International expansion is basically the strategy which helps the organizations to devise
various plan for entering the overseas market and establish their position in that market. In short,
this is the approach through which organizations takes their products and services to another
market segment for gaining competitive advantage. The main aim of this report is to study
international expansion of Barker and Stonehouse in Croatia by conducting PESTEL analysis of
country.
Barker and Stonehouse is primarily British furniture retailer and SME being established
in 1946 and headquartered in England, UK. This organization deals in furniture and offers sofas,
beds, chairs, dining tables etc.
This report gives an overview of PESTEL analysis, marketing strategy and
recommendations.
MAIN BODY
PESTEL analysis
PESTEL analysis is basically the framework which helps organizations to analyze the
various external factors that have bearing on their operations and functions.
Political factors
The various political factors consist of political stability, tax rate, corruption etc,.
Negative- The political stability of Croatia is not highly well-developed and the country is
politically unstable thus this has given rise to high rate of corruption within the country. Due to
high corruption, it will be difficult for Barker and stonehouse to expand in this country.
Positive- Due to the entry of Croatia in European union, the interest rates within the country
have eventually reduced to more than 23.4% and now most of the financial institutions and banks
have lowered their interest rates. This will affect the expansion of Barker and stonehouse in
Croatia positively as it will be easier for them to borrow funds and take loans for their expansion
and operations (PAN, 2017).
Economic factors
These factors consist of exchange rates, GDP, unemployment rates, economic growth etc.
Positive- The GDP of Croatia has increased from past few years and has increased to around
45.5% due to its great economic stability. This will be highly beneficial for Barker and

stonehouse during their expansion as due to the high GDP, the exchange rate has become high
and this will help the company to increase their overall profit.
Negative- Although the GDP of country has increased from few years but still the
unemployment rates in Croatia has increased from around 34.5% to more than 78.6%. There is
thus lack of proper education and skilled workers in the country and this will pose a great
challenge for the company as it will be difficult for company to hire the experienced employees.
Social factors
These consist of attitudes, lifestyle, cultural barriers, health consciousness etc.
Positive- The population in Croatia is around 4.17 million as reported in the year 2016 and thus
this high population growth will affect the company in positive way. Due to great population,
there will be higher options to company to target the different market segment and will help in
their expansion (Vidjak, 2019).
Negative- Due to high unemployment rates in the country, people in Croatia are highly oriented
towards living luxurious life and thus their disposable income is also low. This will affect the
expansion of company in negative way and might affect its overall profit ratio.
Technological factors
These factors consist of innovation, automation level, online sites etc.
Positive- The emergence of the advanced technology due to globalization like artificial
intelligence, robotics will help company to communicate with the customers in Croatia in real
time basis.
Negative impact- As there is high level of illiteracy in Croatia, thus people in this country are
not much oriented towards using digital technology and have low interest in it. This will affect
Barker and stonehouse in negative manner and there are chances that people might not take
much interest in technology during their expansion (Maslarić, Brnjac and Bago, 2016).
Legal factors
These factors mainly consists of discrimination laws, patents, copyrights, health and
safety laws etc.
Positive- the government of UK has reduced the tax and thus have relaxed the restriction on
trading across various country and this will eventually help Barker and stonehouse to expand
their business in Croatia (SHTAL and et.al.,2018).

Negative- The laws in Croatia are highly stringent and thus this will be a challenge for the
company to analyze each and every law of country and start its operations. This will pose certain
limitation on company for trading and functioning.
Environmental factors
These factors encompasses of climatic change, weather conditions, environmental
policies etc.
Positive- Nowadays, people in Croatia have become highly focused towards recycling and reuse
and have a growing concern towards environment. In this scenario, it will be beneficial for
Barker and stonehouse to take its furniture made from raw material of old furniture and thus will
increase its sale as well as reputation among the people (Shatskaya, Samarina and Nekhorosheva,
2016).
Negative- The weather in Croatia is highly infrequent and thus the climate changes more
frequently due to the presence of Adriatic coast. Thus, it will be difficult for the company to
transport its goods and services to various locations and this will be great challenge for them.
Marketing strategy
Mission
The mission of Barker and stonehouse is to provide a better to the people by working
towards the interest of all stakeholders.
Vision
The vision of Barker and Stonehouse is to become the market leader and most trusted
furniture company by providing the quality products at low price and improve the life of people.
Objectives
 To expand in the wider geographies and international market of Croatia towards the end
of 2020.
 To increase the market share by 43% in the next six months.
 To increase the sale of products and services by 23% in market of Croatia by the end of
2020.
Marketing mix
The marketing mix is basically the framework which organizations use for promoting its
brand and products and services to wider audience.

Product
Barker and stonehouse provides a range of products as well as services but the core
product line of this company is furniture. The various products which are being offered by this
company are varied kinds of furniture like sofas, dining tables, office furniture, chairs etc. Thus,
it provides an array of furniture according to the different use of customers (Alava and Mu,
2018).
Price
The major pricing strategy which this company uses is competitive pricing. In this,
company basically sets its prices for the furniture after considering the cost of the products of
their competitors like IKEA. Thus, their prices varies depending on the price changed by their
competitors.
Place
Barker and stonehouse basically has its headquarter in England UK and This company
has more than 10 outlets and currently operates majorly in 4 countries. The distributional channel
of this company is widespread in these locations and mainly sales its products and services
through the use of some intermediaries.
Promotion
The promotional strategy which is being used by Barker and stonehouse is both online
and offline channels. Within the online channels, company mainly promotes its products and
services through social media, its own websites, television. In fact, in 2016 it ran its own
advertisement in television by the name trusted furniture retailers. Not only does it take its brand
message to customers through online channels, but its also makes use of offline channels for
advertising itself like various events, loyalty programs, charitable trusts etc (Çitilci and Akbalık,
2020).
People
Barker and stonehouse has around 10000 employees which are present across different
locations. The employees as well as staff of the company are highly trained as well as skilled
thus providing a great customer services. The main strength of this company is its sales team
which plays a great role in its marketing.

Process
The process of Barker and stonehouse is highly well-defined and the products are mainly
made available to the outlets through the online process. The company have a online delivery
process where the orders are mainly received within computer system and on basis of this the
product is then shipped to various locations (Aithal, 2017).
Physical evidence
Barker and Stonehouse generally sells the products as well as services in the distinct
color packaging which are easily identifiable upon retail shelves. The packaging of the furniture
is highly distinct which helps the customer to recognize the product from outside.
SWOT analysis
This is the tool which is being used by organizations for assessing their own strength and
weakness that impacts their overall growth.
Strength
The major strength of Barker and Stonehouse is their great market research. This efficient
sales team of this company is highly focused towards analyzing the market trends, customer
expectation and undergoes a thorough market research before entering any market. Another
strength is its low price and inexpensive products. Thus, the affordability forms its major
strength which has helped the company to build loyal customers (PAN, 2017).
Weakness
The major weakness of Barker and Stonehouse is its limited product portfolio. This
company only deals in one product line which is furniture due to which its profit remain limited
to single aspect. Another major weakness of this company is its low level of innovation. Barker
and stonehouse has not brought innovation in its furniture from past few years and generally do
not spend much in R&D. Due to this, their market position have been affected.
Opportunity
The major and golden opportunity which is available to the company is increasing
innovation capability. The company has the chance to increase its investment and bring
innovation in its products and services. Along with this, another major opportunity which is
available to the company is entering the new market segment. Being an SME, this company has
limited operation in few countries thus it has the opportunity to extend its supply chain and enter
the new market segment (Vidjak, 2019).

Threats
The major threat which might affect the position of Barker and stonehouse is the
increasing competition. The major competitors of this company are IKEA, Ashely furniture etc
which have strong position in market and might affect its expansion. Another threat is changing
laws. The expansion might have bad impact upon prices of Barker and Stonehouse due to
changing laws in Croatia (Maslarić, Brnjac and Bago, 2016).
STP
This is the tool which is used by organizations for segmenting the large market and
simplifying marketing process.
Segmentation
This is the process in which organization divides large market segment into distinct and
homogeneous ones on basis of their income, gender, educational qualifications, age etc. Barker
and Stonehouse basically divides its customer son the basis of their income and age. Barker and
stonehouse promotes its products to people belonging to middle class family due to low price of
products and generally targets the customers between age of 35 to 50 (SHTAL and et.al.,2018).
Targeting
This is the process in which organization focuses on their target market and their all the
marketing efforts are concentrated on that particular customer segment. Barker and stonehouse
mainly uses differentiated targeting where its concentrates on multi-segment for taking its brand
message to the wider audience. This company mainly analyzes the different market segment and
evaluates the profitable of the various segments and then takes its marketing mix to each of the
market segment (Shatskaya, Samarina and Nekhorosheva, 2016).
Positioning
Positioning is basically the position which a brand occupies within the minds and eyes of
customers. In short, this is the perception of customers towards the specific brand. Barker and
stonehouse mainly uses quality positioning. In this, company provides a great quality of furniture
products at much low cost and thus maintaining its high quality in each and every aspect.
Company continuously improves its product's quality and offer them at much low range.
Opportunity
The major opportunity which is available to Barker and stonehouse in Croatia is
extending its product portfolio. Currently the major product line of company is furniture and

have only products related to the furniture aspects like dining table, sofa sets etc. Thus, company
has the opportunity to enter the new product line like clothing, grocery and extend its operations
in Croatia where people are mostly fascinated by clothes. According to the study, it has been
found that people in Croatia are mainly attracted towards wearing good clothes and gets attracted
towards clothing sector. Thus, company have the opportunity to extend its product portfolio and
enter the clothing segment (Alava and Mu, 2018).
Another major opportunity which is being available to the company is innovation. Barker
and Stonehouse has the opportunity to bring innovation in its products as well as services. As the
people in Croatia are highly focused towards environmental sustainability and mainly
emphasizes on recycling and reusing concept thus company has the opportunity to bring
innovation in its furniture and manufacturing furniture which are made up of the raw material of
old, waste furniture. This will eventually increase the sale of their products and will also increase
their goodwill among customers (Çitilci and Akbalık, 2020).
One more opportunity which is available to the company is increasing the online
marketing channels. The expansion in Croatia gives an opportunity to company to extent its
supply chain and marketing channel and company can focus on more offline platform for taking
its brand message to the people of Croatia. As the people in Croatia are not much technology-
oriented due to high rate of unemployment thus company has the chance to increase its offline
marketing for attracting customers like hosting events, distributing free samples of their furniture
etc.
Recommendations
Croatia is the country where people are not much educated and the unemployment rates
are high due to illiteracy. It has been analyzed from the above study as well as reports that people
in Croatia are highly attracted towards clothing sector and mainly focuses on wearing branded
clothes which suits their personality (Aithal, 2017). Despite the lower disposable income, most
of the people in Croatia spend their income mainly on clothes and thus are highly concerned
about their personality. Thus various incoming international firms should focus on the clothing
sector in order to gain a market share in this country. Besides this, more than half of the
population which are oriented towards clothing sector consists of males between the age group
25 to 40. Thus, for establishing its position in market of Croatia, the various incoming
international firms should concentrate on this niche market. Niche marketing is where the

organization focuses upon a small and specific market segment. Thus, various incoming
international firms including Barker and Stonehouse should shift its focus on the small market
segment consisting of males between age group 25 to 40. Along with this, few people are also
oriented towards food sector apart from the clothing segment thus the various firms should also
focus on entering the grocery sector. For example- Barker and Stonehouse should extend its
product line in grocery segment in order to gain a great market share and establish position in the
eyes of customers. Thus, in the similar way various international forms should shift its focus to
grocery sector (Maslarić, Brnjac and Bago, 2016).
CONCLUSION
It has been summarized that for entering the new country and market segment which is
totally different from the home country, organizations are required to analyze the environment.
Organization mainly conduct PESTEL analysis of the host country which helps them to
recognize the environment of that country and helps in making effective decisions. Once the
macro environment has been analyzed, organizations then develops the marketing strategy which
helps them to outline their major strengths, weakness, marketing mix etc. This marketing
strategy enables them to analyze the various opportunities which they have in the host country.

REFERENCES
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